If it were a public company, the Mississippi band of Choctaw Indians
would be the envy of corporate America. With a return on revenue of 41%,
the
tribe's Silver Star Resort & Casino would top the Fortune 500
profitability list, dwarfing even money spinners like Microsoft, whose 29%
return
last year seems modest by comparison. The Choctaw Tribe has proved even
more productive by another crucial yardstick: influence peddling in
Washington. How successful is it? In 1997 the tribe secured its very
own special-interest provision hidden in a massive federal-spending bill.
And
it taps the government for tens of millions of dollars in federal aid
every year, even though the Silver Star rakes in annual profits of about
$100
million.

Indian gaming interests have come up with a one-two punch that is
helping them get their way with politicians. Indian constituents, ac-
knowledged as long-suffering victims of ill-conceived government
policies, often succeed at requesting political favors. Meanwhile, they or
their
wealthy backers are dumping money—staggering amounts of it—into
political campaigns, lobbying and state ballot initiatives. This combination
has
helped create the out-of-control world of Indian gaming, a world where
the leaders of newly wealthy tribes have so much political power that
they
can flout the rights of neighboring communities, poorer tribes and even
some of their own members. Their political clout also helps them
protect a
chaotic gaming system that has served them well, one that is
characterized by overburdened and underfunded watchdog agencies, a mishmash of
regulations and a lack of financial accountability. As a result,
Washington often ignores the needs of Native Americans in distress while
assisting
those who least need help.

As recently as a decade ago, Indian tribes were barely a blip on the
special-interest radar screen. But since 1993, they have contributed $8.6
million to federal candidates. In the Clinton years, most of the money
went to Democrats. During his second run for office, in 1996, tribes
handed
out a total of $1.9 million, 86% of it to Democrats. But with a
Republican in the White House, Indian tribes have shifted the target of their
largesse. So far this year, 56% of the $1.4 million they have donated
to federal campaigns has gone to the G.O.P. The tribes have invested
even
more heavily in lobbying Congress. In 2000-01 they spent $20 million
lobbying on such issues as preserving the tax-free status of casinos,
expanding gaming operations and protecting Indian sovereign immunity,
which allows them to avoid regulations imposed on other businesses.
No tribe spends more—or more effectively—than Mississippi's Choctaw.
Since 1997 the 8,800-member tribe has distributed some $11 million to
Washington lobbying firms. Most of the money has gone to one of the
capital's premier lobbyists, Jack Abramoff, a top Republican Party fund
raiser.

It was money well spent. In the 1997 legislative caper, Thad Cochran,
Mississippi's five-term Republican Senator, slipped into a 40,000-word
appropriations bill a 19-word sentence that exempts the tribe from
oversight by the National Indian Gaming Commission (NIGC), the regulatory
body
created by Congress to oversee Indian gambling. The sentence also
excuses the Choctaw from paying the fees levied on all other Indian gaming
establishments, which are the NIGC's sole source of revenue. The
savings for the tribe amount to about $180,000 a year. Cochran's provision
argues
that the tribe was self-regulating effectively.

Meanwhile, government audit reports show that over the past five years,
federal agencies have lavished $245 million in aid on the Choctaw. In
2001
alone—the same year the tribe bought a $4.5 million corporate
plane—the Choctaw collected $50.4 million from nearly 70 government programs,
including $14.9 million to run their tribal government, $1.3 million
for law enforcement and almost $371,000 for food distribution. It adds up
to
an average of $5,700 for each member. In contrast, federal aid for the
Navajo Nation, the poorest tribe in America, averaged $900 for each of
its
260,000 members. The Navajo have no casino.

None of this is to begrudge the Mississippi Choctaw their newfound
gaming wealth. Unlike tribes that are content to rely on a casino to
support
themselves without looking to the future, the Choctaw have plowed their
profits into new businesses, from a car dealership to an electronics
plant.
Nor is this to begrudge the Choctaw their ability to extract aid from
Washington. What is awry is a political system that consigns the
majority of
Native Americans to a life of poverty while rewarding the few who have
casino riches with full membership in the system.

MONEY TALKS

These days some of the highest-stakes lobbying in the nation goes on
about two miles west of Capitol Hill at the Bureau of Indian Affairs
(BIA).
The agency, which oversees Native American affairs, decides, among
other things, which tribes qualify for federal recognition—and are thus
entitled to build a casino and receive federal benefits. Not
surprisingly, as Indian gaming has evolved from bingo halls to a
multibillion-dollar
industry, the number of tribes clamoring for recognition has soared:
there are now 337 tribes in the lower 48 states—up almost 25% since
1979.

But since 1993, while the volume and complexity of the petitions have
grown, Congress has slashed the BIA's budget, forcing the agency to
shrink
its staff for handling petitions 35%, to just 11. The agency's Branch
of Acknowledgment and Research (BAR) staff, which evaluates applicants
on a
complex range of factors, including genealogy, culture and continuous
existence, is overwhelmed. The result: a November 2001 report by the
General
Accounting Office (GAO), the investigative arm of Congress, paints the
picture of a process in disarray, calling the BIA understaffed, lacking
coherent guidelines and having no clear sense of mission.
It's a situation ripe for manipulation. In the last two years of the
Clinton Administration, despite a recommendation by bar staff to deny
recognition to six tribal groups, Assistant Secretary for Indian
Affairs Kevin Gover, a former Clinton fund raiser appointed to the post by
the
President, recognized four of the tribes before he left office on Jan.
3, 2001. His successor, Michael Anderson, another Clinton appointee,
then
pressured the BAR staff to change its recommendation on the two other
tribes. In an atmosphere so tense that a staff member later described it
to
the Interior Department's Inspector General as "pure hell," BAR was
pushed to complete the documentation recognizing the tribes by Jan. 19,
the
Administration's last day in office. Three days later, on the first
working day of the Bush Administration, the BAR staff discovered that
Anderson
had failed to sign all the documents necessary to recognize one tribe,
the Duwamish of Washington State. Alerted to the omission, Anderson
drove to
the BIA, where an employee took the papers out to his car to be signed.
The staff member, according to the Interior Department's report, then
backdated the documents to Jan. 19. Anderson says politics played no
role in his decision. "These tribes were well qualified to be
recognized," he
says. Incoming Bush BIA appointees put a hold on Anderson's two
11th-hour approvals. Neither has been recognized so far.

It didn't take the Bush Administration long to pick up where the
Clintonites had left off. Last June, Bush appointees in the BIA recognized
the
Eastern Pequot, an amalgamation of two Connecticut tribes with casino
plans that had received preliminary approval under Clinton. In the past
four
years, spanning both Administrations, the tribe and its investors paid
$525,000 to Ronald Kaufman—a well-connected Republican lobbyist, White
House political director for the first President Bush and a
brother-in-law of current White House chief of staff Andrew Card—to press their
case.
The BIA's recognition came amid widespread opposition by Connecticut
politicians and community groups and questions about the tribe's
authenticity.

Sometimes having a sympathetic Administration in power isn't even
necessary. When their agenda bogs down, well-
connected tribes can go to friends in Congress, skirting the BIA and
the regulatory process altogether. Congress recognized the Pokagon Band
of
Potawatomi Indians of Indiana and Michigan in 1994. With help from a
financial backer, Lyle Berman's Lakes Entertainment Inc., the tribe is on
the
verge of building a casino about 70 miles east of Chicago, in New
Buffalo, Mich. Meanwhile, in the Senate, Virginia Republicans George Allen
and
John Warner have introduced a package deal for six Virginia
tribes—despite the opposition of the BIA, which says the bill would permit the
tribes
to bypass regular channels and allow them "to avoid the scrutiny to
which other groups have been subjected."

TAX DOLLARS AT WORK

Even as they reap ever larger profits from slot machines and gaming
tables, tribes with successful casinos continue to collect federal
taxpayer
dollars. An Office of Management and Budget report shows that from 1993
to 2001, overall federal funding for key Native American programs
climbed
from $5.3 billion to $9.4 billion—a 77% increase. Government and
congressional officials say they have no idea how much of that went to
tribes
with successful casinos. But data Time has analyzed suggest that
Washington often rewards rich tribes and penalizes poor ones by distributing
funds
based on historical practices rather than need. A tribe with a
profitable casino often gets more money per capita than a tribe without one.
Consider the BIA's distribution of tribal-priority-allocation (TPA)
funds to tribes. Each year the BIA hands out about $800 million for basic
programs such as general assistance to individual Indians and families,
vocational training and child welfare. While tpa funding is a small
fraction of the BIA's total spending on Native Americans, it
underscores how awry the system has gone. In President Bush's 2003 budget
proposal,
the 28,000 Turtle Mountain Chippewa in North Dakota, 68% of whom are
unemployed, will receive the equivalent of an average $154 each. But the
400
members of the Miccosukee Tribe in Florida, whose Miccosukee Resort and
Gaming Center rakes in an estimated $75 million a year, will collect
$2,858
per person—
almost 19 times as much. In South Dakota the 41,000 Oglala Sioux, with
unemployment at 88%, will receive $168 per person. But California's
Rumsey
Band of Wintun Indians, whose casino takes in an estimated $150 million
a year, will collect an average of $4,457 for each of its 44 members.

The GAO has twice criticized the BIA's distribution system, pointing
out that "tribes with the highest reported revenues can receive more tpa
base
funds than other tribes with no revenues or with losses." Congress
directed the BIA to report by April 1, 1999, "on alternative methods for
distributing tpa funds, taking into account tribal revenues and the
relative needs of tribes and tribal members." While acknowledging funding
inequities, the BIA will not change the system. One reason: the tribes
view such government funding as an entitlement. As an official of the
Mille
Lacs Band of Ojibwe Indians—a tribe in Minnesota with two casinos,
which take in an estimated $200 million a year in revenue—
once told a congressional committee, "The United States has a moral and
legal obligation to provide tpa funding to tribal governments ... The
facts
of the inequities are not that some tribes have been given too much but
rather that other tribes have been given too little."

Such inequities occur not only with BIA funds. A TIME examination of
spending by the Department of Housing and Urban Development (HUD) shows
that
tribes with casinos often pull in more hud money per capita than
casino-less, poor tribes. Over the past four years, while hud has handed the
Florida Seminoles housing funds averaging $2,800 per member, the
tribe's five casinos have generated nearly $1 billion in revenue. The
Mississippi
Choctaw tribe, with its lucrative Silver Star Resort & Casino, pocketed
an average of $5,900 in hud funds per person. By contrast, the Navajo,
the
country's largest tribe, has a 52% unemployment rate but has received
only $1,500 per member.

CALIFORNIA SCHEMING

Tribes may be wielding increased political influence in Washington, but
at the state level, small Indian tribes with immensely profitable
casinos
are exerting even more disproportionate clout. Nowhere is it greater
than in California, where combined Indian gaming revenue, at $4 billion
and
growing, is set to surpass that of all the casinos in Las Vegas.
How much are tribes spending? To win passage of the two ballot
initiatives in 1998 and 2000 that legalized Indian gaming in the state, several
small tribes spent a total of nearly $100 million. The San Manuel Band
of Serrano Mission Indians, which owns a casino in San Bernardino
County,
spent a staggering $34.7 million—an average of almost $520,000 for
each of the tribe's 67 adult members. Both initiatives passed.

It's not only the size of the political expenditures that is causing
concern. Some tribes have violated campaign-finance laws. Earlier this
year,
California's Fair Political Practices Commission, which monitors the
state's elections, charged that since 1998 one tribe—the 232-member Agua
Caliente Band of Cahuilla Indians, which has a pair of money-churning
casinos near Palm Springs—had failed to promptly report multiple
contributions totaling $8.5 million. When the commission tried to work
out a settlement, the Agua Caliente would not negotiate, contending
that
because the tribe is a sovereign nation, California campaign-finance
laws do not apply. Like all federally recognized tribes, the Agua
Caliente is
a self-governing entity and thus generally exempt from state and local
laws.

Despite that, the commission filed a lawsuit, assuming that
California's attorney general, Bill Lockyer—the state's top law-enforcement
officer—would represent the agency. But he declined. Lockyer, by the
way, has accepted substantial campaign contributions from Indian
tribes—some
$800,000 in the past four years, including $175,000 from the Agua
Caliente Band. As a consequence, the commission has had to hire an outside
lawyer, a move that will cost unnecessary tax dollars. Jim Knox,
California Common Cause's executive director, believes that actions against
the
Agua Caliente and other tribes must be pursued. "If they are sovereign
nations, they shouldn't be able to contribute to candidates or ballot
measures," says Knox, pointing out that it's illegal for a foreign
state or business to pump money into U.S. elections. "And if they aren't,
they
should be subject to the state's election and campaign-finance laws.
The tribes are trying to have it both ways."

And so far, that has worked. Tribes have become California's largest
special-interest donors. In his recent reelection campaign, Governor Gray
Davis picked up $1.8 million from them, and he, more than anyone else,
is responsible for the face of California gaming. The compacts he
signed
with the tribes in 1999 paved the way for the explosion in the state's
Indian casinos, which number 48 and may climb to 70.

Because tribes pay no state or local taxes, the compacts Davis
negotiated provide for tribal contributions to a special impact fund. The money
will
go to local communities overburdened by booming casinos and help defray
the increased costs of local government services. California officials
estimate that the tribes will pay about $100 million a year into the
fund. By contrast, Connecticut collected $332 million last year from its
two
Indian casinos, Foxwoods and the Mohegan Sun. If California tribes were
paying at the same rate—25% of slot revenue—the state would collect
up to
$1 billion.

NIGHTMARE NEIGHBORS

As the profitability and size of Indian casinos have grown, so has
friction between the gaming ventures and surrounding communities. Last
summer
tensions between the Rumsey Band of Wintun Indians and its neighbors in
the rural Northern California Capay Valley erupted into a bitter war of
words when the tribe announced plans to double the size of its hillside
gaming business. Highway 16, the narrow, serpentine road that winds
past
the Cache Creek Indian Bingo and Casino on its way into the tiny hamlet
of Brooks, is already congested from round-the-clock traffic to the
casino.
In 2001, traffic to Cache Creek, with its estimated $150 million annual
revenue, was up 87% from the year before, according to a California
department of transportation study.

Indian casinos are overloading other communities across the country.
One exacerbating factor: because of tribal sovereignty, if a casino
overwhelms
local emergency services, draws down the local water supply or pollutes
the environment, local authorities have no recourse. Tom Frederick, who
owns a small vineyard north of the casino, found that out the hard way.
For years, as sewage from the casino seeped onto his property, he tried
to
get the Rumsey Indians to deal with the problem. Recently the
waste-water drainage slowed when the tribe relined a sewage-holding pond, but
tribal
officials will not talk to him about any damage to his property. "They
use sovereignty as a shield," he says.

After protracted negotiations, the Rumsey Band and Yolo County
officials reached a tentative accord on the casino expansion. The tribe, which
views
the deal as a concession, since it is a partial surrender of its
sovereignty, agreed to slightly reduce the size of the expansion and pay the
county more than $5 million a year for 18 years to deal with traffic,
environmental and other problems. But relations remain strained.
Bulldozers
moved onto the Rumsey reservation and began clearing land even before
the county board had approved the agreement.

A TALE OF TWO TRIBES

After the supreme court gave the green light to gaming on Indian
reservations, Congress set up a regulatory scheme that is contradictory,
inconsistent and shielded from public scrutiny. How arbitrary is it?
The National Indian Gaming Commission can levy fines but has no power to
collect them. Each tribe has its own gaming commission, but that's like
Enron's auditors auditing themselves. States monitor casinos in some
situations but not in others. Federal prosecutors may go after one
casino for a gaming violation while ignoring the same violation by a
wealthy and
powerful tribe.

Few tribes are more powerful than Florida's Seminoles, who pioneered
high-stakes bingo and won Supreme Court approval for Indian gaming
everywhere.
James E. Billie, the Seminoles' alligator-wrestling, folk-singing chief
from 1979 to 2001, is the person most responsible for creating the
tribe's
gambling wealth and also personifies its flamboyant excesses. In a
power struggle last year, the tribal council suspended Billie pending
resolution
of a sexual-harassment lawsuit (it was recently dropped) and an audit
of questionable tribal financial dealings, which is still going on. At
the
time, he was the highest-paid elected official in Florida, with an
annual salary of $330,000. He was responsible as tribal head for the
purchase of
a corporate jet and a minifleet of helicopters.

But Billie also shared his wealth with tribe members, who last year
received individual dividend checks of $36,000 from casino profits. And he
took
care of other Seminole leaders. Under his reign, each councilman had a
discretionary fund of at least $5 million; Billie's was $15 million.

More
was available if needed, and it often was. One councilman ran through
$57 million in less than four years.
Ordinarily states have no jurisdiction over sovereign Indian
reservations. But if an Indian casino wants to offer Las Vegas-style games—like
roulette, baccarat and blackjack—or slot machines in a state where
such gambling is illegal, it must make a regulatory compact with the
state. The
Seminoles have 3,160 machines that look and perform like slots.
Florida, which doesn't allow such high-stakes professional gambling, also
known as
Class III gaming, says the machines are illegal without a compact and
wants the casinos closed down. The Seminoles claim the machines are not
slots
but "electronic terminals," so the tribe needs no compact. The Clinton
Administration, in one of the decisions made as it was turning out the
lights on Jan. 19, 2001, issued an order approving the Seminole
operation. The incoming Bush Administration promptly rescinded the order
pending
further study.

But the Seminoles aren't waiting for the Federal Government's go-ahead.
They have broken ground for a casino-hotel-entertainment complex with a
new
partner, Hard Rock Cafe International. The casino-resort, which will
also have convention facilities, a beach club and a spa, will add to the
Seminoles' lucrative gaming business. Last year the tribe's two
casinos, in Hollywood and Tampa, made a combined profit of $216 million on
revenue
of $254 million—a return of 85%. By comparison, General Electric,
often described by the media as America's best-managed company, reported
net
income of $13.7 billion for 2001, an 11% return on revenue.

The Santee Sioux casino is a more modest affair. Set on a 200-sq.-mi.
reservation along the Missouri River in northeast Nebraska, the gambling
hall
was set up in a converted cafe and has 60 slot machines. But soon after
the casino opened in 1996, federal authorities sought to close it. The
issue: the tribe, like the Seminoles, has no compact with the state,
though it wasn't for lack of trying.

In the early 1990s the 2,700-member tribe sought a compact with
Nebraska to open a casino on the reservation where some 1,000 members still
live.

Nebraska refused to negotiate. In February 1996, when the only private
employer on the reservation, a pharmaceutical company, closed its small
plant, the tribe, with 59% of its members living below the poverty
line, went ahead anyway, opening the Ohiya Casino and installing Las
Vegas-style
slot machines. Thelma Thomas, a Santee Sioux who managed the casino,
recalls that the tribe thought it had "the inherent sovereign right and
legal
right" to offer Class III gaming because, she says, "Nebraska would not
negotiate a tribal gaming compact after six years of negotiations."
The Indian Gaming Regulatory Act (IGRA), the law governing Indian
gambling, seems to support the Santees' decision. The act says, "It is the
committee's intent that the compact requirement for Class III not be
used as a justification by a state for excluding Indian tribes from such
gaming." No matter. The NIGC ordered the tribe to close the casino by
May 1996. It did, with the understanding the state would work with the
tribe
on other economic development ventures.

When the state failed to deliver, the tribe reopened the casino in
June. Enter the Department of Justice, which sued to close the operation
down.
The tribe, reluctant to end its one moneymaking venture, refused. A
federal judge imposed a $3,000-a-day levy, then upped it to $6,000. In no
time,
the tribe owed more than $1 million. Meanwhile, the Justice Department
began seizing the tribe's bank accounts, including those containing
funds
earmarked for child safety seats and nutrition programs for the
elderly. It even took money out of individual Indians' accounts. Says Thomas:
"They've virtually moved to shut this tribe down—the United States."
The uproar of negative publicity forced the government to return some
of the money, but it is still holding most of it. And there is still $4
million in unpaid fines, according to the tribe's attorney, Conly J.
Schulte. "The tribe to this day can't use bank accounts for fear that the
Federal Government is just going to seize any money," says Schulte.
That thwarts the tribe's attempts to invest in any business, even one
having
nothing to do with gambling.

Casting about for a way out of the dilemma, Schulte and Santee Sioux
representatives traveled to Washington in February 2001 to seek the
NIGC's
guidance. Commission officials advised the tribe to install pseudo slot
machines—like those used by the Seminoles—to get around the Class III
controversy. The tribe complied—at a substantial economic cost. With
the switch to the pseudo slots, Thomas says, revenue has fallen by
two-thirds. The casino employs only 15 people, and the income barely
covers operating costs. There is no longer any money for tribal programs.

But that's the least of the tribe's worries. The Justice Department
sued the tribe again, charging that the machines the NIGC had recommended
were
actually illegal. A federal judge in Omaha, Neb., disagreed and sided
with the Indians and the NIGC. But the Justice Department appealed the
ruling
and dispatched a squad of high-powered litigators who prosecute
organized-crime kingpins to argue the case. Com-menting on the Justice
Department's actions, Thomas says, "They have done everything they
could to make this tribe out to be criminals when all we are is struggling
to
survive."

—With reporting by Laura
Karmatz/New York and research by Joan Levinstein, Mitch Frank and Nadia
Mustafa
If it were a public company, the Mississippi band of Choctaw Indians
would be the envy of corporate America. With a return on revenue of 41%,
the
tribe's Silver Star Resort & Casino would top the Fortune 500
profitability list, dwarfing even money spinners like Microsoft, whose 29%
return
last year seems modest by comparison. The Choctaw Tribe has proved even
more productive by another crucial yardstick: influence peddling in
Washington. How successful is it? In 1997 the tribe secured its very
own special-interest provision hidden in a massive federal-spending bill.
And
it taps the government for tens of millions of dollars in federal aid
every year, even though the Silver Star rakes in annual profits of about
$100
million.

Indian gaming interests have come up with a one-two punch that is
helping them get their way with politicians. Indian constituents, ac-
knowledged as long-suffering victims of ill-conceived government
policies, often succeed at requesting political favors. Meanwhile, they or
their
wealthy backers are dumping money—staggering amounts of it—into
political campaigns, lobbying and state ballot initiatives. This combination
has
helped create the out-of-control world of Indian gaming, a world where
the leaders of newly wealthy tribes have so much political power that
they
can flout the rights of neighboring communities, poorer tribes and even
some of their own members. Their political clout also helps them
protect a
chaotic gaming system that has served them well, one that is
characterized by overburdened and underfunded watchdog agencies, a mishmash of
regulations and a lack of financial accountability. As a result,
Washington often ignores the needs of Native Americans in distress while
assisting
those who least need help.

As recently as a decade ago, Indian tribes were barely a blip on the
special-interest radar screen. But since 1993, they have contributed $8.6
million to federal candidates. In the Clinton years, most of the money
went to Democrats. During his second run for office, in 1996, tribes
handed
out a total of $1.9 million, 86% of it to Democrats. But with a
Republican in the White House, Indian tribes have shifted the target of their
largesse. So far this year, 56% of the $1.4 million they have donated
to federal campaigns has gone to the G.O.P. The tribes have invested
even
more heavily in lobbying Congress. In 2000-01 they spent $20 million
lobbying on such issues as preserving the tax-free status of casinos,
expanding gaming operations and protecting Indian sovereign immunity,
which allows them to avoid regulations imposed on other businesses.
No tribe spends more—or more effectively—than Mississippi's Choctaw.
Since 1997 the 8,800-member tribe has distributed some $11 million to
Washington lobbying firms. Most of the money has gone to one of the
capital's premier lobbyists, Jack Abramoff, a top Republican Party fund
raiser.

It was money well spent. In the 1997 legislative caper, Thad Cochran,
Mississippi's five-term Republican Senator, slipped into a 40,000-word
appropriations bill a 19-word sentence that exempts the tribe from
oversight by the National Indian Gaming Commission (NIGC), the regulatory
body
created by Congress to oversee Indian gambling. The sentence also
excuses the Choctaw from paying the fees levied on all other Indian gaming
establishments, which are the NIGC's sole source of revenue. The
savings for the tribe amount to about $180,000 a year. Cochran's provision
argues
that the tribe was self-regulating effectively.

Meanwhile, government audit reports show that over the past five years,
federal agencies have lavished $245 million in aid on the Choctaw. In
2001
alone—the same year the tribe bought a $4.5 million corporate
plane—the Choctaw collected $50.4 million from nearly 70 government programs,
including $14.9 million to run their tribal government, $1.3 million
for law enforcement and almost $371,000 for food distribution. It adds up
to
an average of $5,700 for each member. In contrast, federal aid for the
Navajo Nation, the poorest tribe in America, averaged $900 for each of
its
260,000 members. The Navajo have no casino.

None of this is to begrudge the Mississippi Choctaw their newfound
gaming wealth. Unlike tribes that are content to rely on a casino to
support
themselves without looking to the future, the Choctaw have plowed their
profits into new businesses, from a car dealership to an electronics
plant.
Nor is this to begrudge the Choctaw their ability to extract aid from
Washington. What is awry is a political system that consigns the
majority of
Native Americans to a life of poverty while rewarding the few who have
casino riches with full membership in the system.

MONEY TALKS

These days some of the highest-stakes lobbying in the nation goes on
about two miles west of Capitol Hill at the Bureau of Indian Affairs
(BIA).
The agency, which oversees Native American affairs, decides, among
other things, which tribes qualify for federal recognition—and are thus
entitled to build a casino and receive federal benefits. Not
surprisingly, as Indian gaming has evolved from bingo halls to a
multibillion-dollar
industry, the number of tribes clamoring for recognition has soared:
there are now 337 tribes in the lower 48 states—up almost 25% since
1979.

But since 1993, while the volume and complexity of the petitions have
grown, Congress has slashed the BIA's budget, forcing the agency to
shrink
its staff for handling petitions 35%, to just 11. The agency's Branch
of Acknowledgment and Research (BAR) staff, which evaluates applicants
on a
complex range of factors, including genealogy, culture and continuous
existence, is overwhelmed. The result: a November 2001 report by the
General
Accounting Office (GAO), the investigative arm of Congress, paints the
picture of a process in disarray, calling the BIA understaffed, lacking
coherent guidelines and having no clear sense of mission.
It's a situation ripe for manipulation. In the last two years of the
Clinton Administration, despite a recommendation by bar staff to deny
recognition to six tribal groups, Assistant Secretary for Indian
Affairs Kevin Gover, a former Clinton fund raiser appointed to the post by
the
President, recognized four of the tribes before he left office on Jan.
3, 2001. His successor, Michael Anderson, another Clinton appointee,
then
pressured the BAR staff to change its recommendation on the two other
tribes. In an atmosphere so tense that a staff member later described it
to
the Interior Department's Inspector General as "pure hell," BAR was
pushed to complete the documentation recognizing the tribes by Jan. 19,
the
Administration's last day in office. Three days later, on the first
working day of the Bush Administration, the BAR staff discovered that
Anderson
had failed to sign all the documents necessary to recognize one tribe,
the Duwamish of Washington State. Alerted to the omission, Anderson
drove to
the BIA, where an employee took the papers out to his car to be signed.
The staff member, according to the Interior Department's report, then
backdated the documents to Jan. 19. Anderson says politics played no
role in his decision. "These tribes were well qualified to be
recognized," he
says. Incoming Bush BIA appointees put a hold on Anderson's two
11th-hour approvals. Neither has been recognized so far.

It didn't take the Bush Administration long to pick up where the
Clintonites had left off. Last June, Bush appointees in the BIA recognized
the
Eastern Pequot, an amalgamation of two Connecticut tribes with casino
plans that had received preliminary approval under Clinton. In the past
four
years, spanning both Administrations, the tribe and its investors paid
$525,000 to Ronald Kaufman—a well-connected Republican lobbyist, White
House political director for the first President Bush and a
brother-in-law of current White House chief of staff Andrew Card—to press their
case.
The BIA's recognition came amid widespread opposition by Connecticut
politicians and community groups and questions about the tribe's
authenticity.

Sometimes having a sympathetic Administration in power isn't even
necessary. When their agenda bogs down, well-
connected tribes can go to friends in Congress, skirting the BIA and
the regulatory process altogether. Congress recognized the Pokagon Band
of
Potawatomi Indians of Indiana and Michigan in 1994. With help from a
financial backer, Lyle Berman's Lakes Entertainment Inc., the tribe is on
the
verge of building a casino about 70 miles east of Chicago, in New
Buffalo, Mich. Meanwhile, in the Senate, Virginia Republicans George Allen
and
John Warner have introduced a package deal for six Virginia
tribes—despite the opposition of the BIA, which says the bill would permit the
tribes
to bypass regular channels and allow them "to avoid the scrutiny to
which other groups have been subjected."

TAX DOLLARS AT WORK

Even as they reap ever larger profits from slot machines and gaming
tables, tribes with successful casinos continue to collect federal
taxpayer
dollars. An Office of Management and Budget report shows that from 1993
to 2001, overall federal funding for key Native American programs
climbed
from $5.3 billion to $9.4 billion—a 77% increase. Government and
congressional officials say they have no idea how much of that went to
tribes
with successful casinos. But data Time has analyzed suggest that
Washington often rewards rich tribes and penalizes poor ones by distributing
funds
based on historical practices rather than need. A tribe with a
profitable casino often gets more money per capita than a tribe without one.
Consider the BIA's distribution of tribal-priority-allocation (TPA)
funds to tribes. Each year the BIA hands out about $800 million for basic
programs such as general assistance to individual Indians and families,
vocational training and child welfare. While tpa funding is a small
fraction of the BIA's total spending on Native Americans, it
underscores how awry the system has gone. In President Bush's 2003 budget
proposal,
the 28,000 Turtle Mountain Chippewa in North Dakota, 68% of whom are
unemployed, will receive the equivalent of an average $154 each. But the
400
members of the Miccosukee Tribe in Florida, whose Miccosukee Resort and
Gaming Center rakes in an estimated $75 million a year, will collect
$2,858
per person—
almost 19 times as much. In South Dakota the 41,000 Oglala Sioux, with
unemployment at 88%, will receive $168 per person. But California's
Rumsey
Band of Wintun Indians, whose casino takes in an estimated $150 million
a year, will collect an average of $4,457 for each of its 44 members.

The GAO has twice criticized the BIA's distribution system, pointing
out that "tribes with the highest reported revenues can receive more tpa
base
funds than other tribes with no revenues or with losses." Congress
directed the BIA to report by April 1, 1999, "on alternative methods for
distributing tpa funds, taking into account tribal revenues and the
relative needs of tribes and tribal members." While acknowledging funding
inequities, the BIA will not change the system. One reason: the tribes
view such government funding as an entitlement. As an official of the
Mille
Lacs Band of Ojibwe Indians—a tribe in Minnesota with two casinos,
which take in an estimated $200 million a year in revenue—
once told a congressional committee, "The United States has a moral and
legal obligation to provide tpa funding to tribal governments ... The
facts
of the inequities are not that some tribes have been given too much but
rather that other tribes have been given too little."

Such inequities occur not only with BIA funds. A TIME examination of
spending by the Department of Housing and Urban Development (HUD) shows
that
tribes with casinos often pull in more hud money per capita than
casino-less, poor tribes. Over the past four years, while hud has handed the
Florida Seminoles housing funds averaging $2,800 per member, the
tribe's five casinos have generated nearly $1 billion in revenue. The
Mississippi
Choctaw tribe, with its lucrative Silver Star Resort & Casino, pocketed
an average of $5,900 in hud funds per person. By contrast, the Navajo,
the
country's largest tribe, has a 52% unemployment rate but has received
only $1,500 per member.

CALIFORNIA SCHEMING

Tribes may be wielding increased political influence in Washington, but
at the state level, small Indian tribes with immensely profitable
casinos
are exerting even more disproportionate clout. Nowhere is it greater
than in California, where combined Indian gaming revenue, at $4 billion
and
growing, is set to surpass that of all the casinos in Las Vegas.
How much are tribes spending? To win passage of the two ballot
initiatives in 1998 and 2000 that legalized Indian gaming in the state, several
small tribes spent a total of nearly $100 million. The San Manuel Band
of Serrano Mission Indians, which owns a casino in San Bernardino
County,
spent a staggering $34.7 million—an average of almost $520,000 for
each of the tribe's 67 adult members. Both initiatives passed.

It's not only the size of the political expenditures that is causing
concern. Some tribes have violated campaign-finance laws. Earlier this
year,
California's Fair Political Practices Commission, which monitors the
state's elections, charged that since 1998 one tribe—the 232-member Agua
Caliente Band of Cahuilla Indians, which has a pair of money-churning
casinos near Palm Springs—had failed to promptly report multiple
contributions totaling $8.5 million. When the commission tried to work
out a settlement, the Agua Caliente would not negotiate, contending
that
because the tribe is a sovereign nation, California campaign-finance
laws do not apply. Like all federally recognized tribes, the Agua
Caliente is
a self-governing entity and thus generally exempt from state and local
laws.

Despite that, the commission filed a lawsuit, assuming that
California's attorney general, Bill Lockyer—the state's top law-enforcement
officer—would represent the agency. But he declined. Lockyer, by the
way, has accepted substantial campaign contributions from Indian
tribes—some
$800,000 in the past four years, including $175,000 from the Agua
Caliente Band. As a consequence, the commission has had to hire an outside
lawyer, a move that will cost unnecessary tax dollars. Jim Knox,
California Common Cause's executive director, believes that actions against
the
Agua Caliente and other tribes must be pursued. "If they are sovereign
nations, they shouldn't be able to contribute to candidates or ballot
measures," says Knox, pointing out that it's illegal for a foreign
state or business to pump money into U.S. elections. "And if they aren't,
they
should be subject to the state's election and campaign-finance laws.
The tribes are trying to have it both ways."

And so far, that has worked. Tribes have become California's largest
special-interest donors. In his recent reelection campaign, Governor Gray
Davis picked up $1.8 million from them, and he, more than anyone else,
is responsible for the face of California gaming. The compacts he
signed
with the tribes in 1999 paved the way for the explosion in the state's
Indian casinos, which number 48 and may climb to 70.

Because tribes pay no state or local taxes, the compacts Davis
negotiated provide for tribal contributions to a special impact fund. The money
will
go to local communities overburdened by booming casinos and help defray
the increased costs of local government services. California officials
estimate that the tribes will pay about $100 million a year into the
fund. By contrast, Connecticut collected $332 million last year from its
two
Indian casinos, Foxwoods and the Mohegan Sun. If California tribes were
paying at the same rate—25% of slot revenue—the state would collect
up to
$1 billion.

NIGHTMARE NEIGHBORS

As the profitability and size of Indian casinos have grown, so has
friction between the gaming ventures and surrounding communities. Last
summer
tensions between the Rumsey Band of Wintun Indians and its neighbors in
the rural Northern California Capay Valley erupted into a bitter war of
words when the tribe announced plans to double the size of its hillside
gaming business. Highway 16, the narrow, serpentine road that winds
past
the Cache Creek Indian Bingo and Casino on its way into the tiny hamlet
of Brooks, is already congested from round-the-clock traffic to the
casino.
In 2001, traffic to Cache Creek, with its estimated $150 million annual
revenue, was up 87% from the year before, according to a California
department of transportation study.

Indian casinos are overloading other communities across the country.
One exacerbating factor: because of tribal sovereignty, if a casino
overwhelms
local emergency services, draws down the local water supply or pollutes
the environment, local authorities have no recourse. Tom Frederick, who
owns a small vineyard north of the casino, found that out the hard way.
For years, as sewage from the casino seeped onto his property, he tried
to
get the Rumsey Indians to deal with the problem. Recently the
waste-water drainage slowed when the tribe relined a sewage-holding pond, but
tribal
officials will not talk to him about any damage to his property. "They
use sovereignty as a shield," he says.

After protracted negotiations, the Rumsey Band and Yolo County
officials reached a tentative accord on the casino expansion. The tribe, which
views
the deal as a concession, since it is a partial surrender of its
sovereignty, agreed to slightly reduce the size of the expansion and pay the
county more than $5 million a year for 18 years to deal with traffic,
environmental and other problems. But relations remain strained.
Bulldozers
moved onto the Rumsey reservation and began clearing land even before
the county board had approved the agreement.

A TALE OF TWO TRIBES

After the supreme court gave the green light to gaming on Indian
reservations, Congress set up a regulatory scheme that is contradictory,
inconsistent and shielded from public scrutiny. How arbitrary is it?
The National Indian Gaming Commission can levy fines but has no power to
collect them. Each tribe has its own gaming commission, but that's like
Enron's auditors auditing themselves. States monitor casinos in some
situations but not in others. Federal prosecutors may go after one
casino for a gaming violation while ignoring the same violation by a
wealthy and
powerful tribe.

Few tribes are more powerful than Florida's Seminoles, who pioneered
high-stakes bingo and won Supreme Court approval for Indian gaming
everywhere.
James E. Billie, the Seminoles' alligator-wrestling, folk-singing chief
from 1979 to 2001, is the person most responsible for creating the
tribe's
gambling wealth and also personifies its flamboyant excesses. In a
power struggle last year, the tribal council suspended Billie pending
resolution
of a sexual-harassment lawsuit (it was recently dropped) and an audit
of questionable tribal financial dealings, which is still going on. At
the
time, he was the highest-paid elected official in Florida, with an
annual salary of $330,000. He was responsible as tribal head for the
purchase of
a corporate jet and a minifleet of helicopters.

But Billie also shared his wealth with tribe members, who last year
received individual dividend checks of $36,000 from casino profits. And he
took
care of other Seminole leaders. Under his reign, each councilman had a
discretionary fund of at least $5 million; Billie's was $15 million.

More
was available if needed, and it often was. One councilman ran through
$57 million in less than four years.
Ordinarily states have no jurisdiction over sovereign Indian
reservations. But if an Indian casino wants to offer Las Vegas-style games—like
roulette, baccarat and blackjack—or slot machines in a state where
such gambling is illegal, it must make a regulatory compact with the
state. The
Seminoles have 3,160 machines that look and perform like slots.
Florida, which doesn't allow such high-stakes professional gambling, also
known as
Class III gaming, says the machines are illegal without a compact and
wants the casinos closed down. The Seminoles claim the machines are not
slots
but "electronic terminals," so the tribe needs no compact. The Clinton
Administration, in one of the decisions made as it was turning out the
lights on Jan. 19, 2001, issued an order approving the Seminole
operation. The incoming Bush Administration promptly rescinded the order
pending
further study.

But the Seminoles aren't waiting for the Federal Government's go-ahead.
They have broken ground for a casino-hotel-entertainment complex with a
new
partner, Hard Rock Cafe International. The casino-resort, which will
also have convention facilities, a beach club and a spa, will add to the
Seminoles' lucrative gaming business. Last year the tribe's two
casinos, in Hollywood and Tampa, made a combined profit of $216 million on
revenue
of $254 million—a return of 85%. By comparison, General Electric,
often described by the media as America's best-managed company, reported
net
income of $13.7 billion for 2001, an 11% return on revenue.

The Santee Sioux casino is a more modest affair. Set on a 200-sq.-mi.
reservation along the Missouri River in northeast Nebraska, the gambling
hall
was set up in a converted cafe and has 60 slot machines. But soon after
the casino opened in 1996, federal authorities sought to close it. The
issue: the tribe, like the Seminoles, has no compact with the state,
though it wasn't for lack of trying.

In the early 1990s the 2,700-member tribe sought a compact with
Nebraska to open a casino on the reservation where some 1,000 members still
live.

Nebraska refused to negotiate. In February 1996, when the only private
employer on the reservation, a pharmaceutical company, closed its small
plant, the tribe, with 59% of its members living below the poverty
line, went ahead anyway, opening the Ohiya Casino and installing Las
Vegas-style
slot machines. Thelma Thomas, a Santee Sioux who managed the casino,
recalls that the tribe thought it had "the inherent sovereign right and
legal
right" to offer Class III gaming because, she says, "Nebraska would not
negotiate a tribal gaming compact after six years of negotiations."
The Indian Gaming Regulatory Act (IGRA), the law governing Indian
gambling, seems to support the Santees' decision. The act says, "It is the
committee's intent that the compact requirement for Class III not be
used as a justification by a state for excluding Indian tribes from such
gaming." No matter. The NIGC ordered the tribe to close the casino by
May 1996. It did, with the understanding the state would work with the
tribe
on other economic development ventures.

When the state failed to deliver, the tribe reopened the casino in
June. Enter the Department of Justice, which sued to close the operation
down.
The tribe, reluctant to end its one moneymaking venture, refused. A
federal judge imposed a $3,000-a-day levy, then upped it to $6,000. In no
time,
the tribe owed more than $1 million. Meanwhile, the Justice Department
began seizing the tribe's bank accounts, including those containing
funds
earmarked for child safety seats and nutrition programs for the
elderly. It even took money out of individual Indians' accounts. Says Thomas:
"They've virtually moved to shut this tribe down—the United States."
The uproar of negative publicity forced the government to return some
of the money, but it is still holding most of it. And there is still $4
million in unpaid fines, according to the tribe's attorney, Conly J.
Schulte. "The tribe to this day can't use bank accounts for fear that the
Federal Government is just going to seize any money," says Schulte.
That thwarts the tribe's attempts to invest in any business, even one
having
nothing to do with gambling.

Casting about for a way out of the dilemma, Schulte and Santee Sioux
representatives traveled to Washington in February 2001 to seek the
NIGC's
guidance. Commission officials advised the tribe to install pseudo slot
machines—like those used by the Seminoles—to get around the Class III
controversy. The tribe complied—at a substantial economic cost. With
the switch to the pseudo slots, Thomas says, revenue has fallen by
two-thirds. The casino employs only 15 people, and the income barely
covers operating costs. There is no longer any money for tribal programs.

But that's the least of the tribe's worries. The Justice Department
sued the tribe again, charging that the machines the NIGC had recommended
were
actually illegal. A federal judge in Omaha, Neb., disagreed and sided
with the Indians and the NIGC. But the Justice Department appealed the
ruling
and dispatched a squad of high-powered litigators who prosecute
organized-crime kingpins to argue the case. Com-menting on the Justice
Department's actions, Thomas says, "They have done everything they
could to make this tribe out to be criminals when all we are is struggling
to
survive."